Study: CRM Investments Paying Off

Aberdeen finds broad satisfaction with return on customer relationship management investments

Boston, MA — April 21, 2003 — A majority of businesses utilizing customer relationship management (CRM) products say the technology has yielded demonstrable benefits and produced notable investment returns for them, according to a new report from technology consultancy Aberdeen Group.

Separately, a report from consulting firm Best Practices cites customer input capture and customized customer management plans as critical to CRM success.

The Aberdeen report, based on a survey of about 325 customers of Siebel Systems, a CRM solution provider, revealed that 95 percent of the survey respondents indicated they are satisfied with their customer relationship management investment and will continue to use their CRM solutions. Aberdeen has disclosed that Seibel paid for the study but said the provider had no input on the results.

Interestingly, most of the respondents said they do not measure return on investment (ROI) in a formal way, but Aberdeen said the differences between companies that formally measure and those that estimate their ROI were not statistically significant.

Most customers cited specific benefits they receive from their CRM deployments, and most pointed to productivity improvements in specific areas. Customers reported that, on average, sales productivity increased 17 percent, service and contact center productivity increased 16 percent and marketing productivity increased 12 percent.

Operating costs declined by 10.4 percent for more than 87 percent of the customers surveyed, according to Aberdeen.

Only 0.6 percent of survey respondents said they would discontinue using their CRM systems altogether, while 1.5 percent said they would change vendors and 73 percent of the survey respondents said they would add to or upgrade their CRM system in the next 12 months.

"This is the first study to evaluate the efficacy of CRM as a business solution based on a comprehensive sample of users," said Denis Pombriant, vice president and managing director for customer relationship management at Aberdeen. "Our research indicates that Siebel customers are getting the value they expect from their CRM investments. Most customers believe that their CRM technology is helping them to compete more effectively and generate larger revenues and profits as well as helping them to cut their overhead in ways that were difficult or impossible to accomplish before the introduction of their systems."

The survey audience consisted of business and technical users of Siebel systems who were involved in decisions about the purchase, use and administration of such systems. Aberdeen said that the survey sample was randomly drawn from the Siebel installed base and reflected the customer demographics of that population.

Meanwhile, in a separate study, Chapel Hill, N.C.-based research and consulting firm Best Practices this week reported that companies looking to get the most out of their CRM investments should focus on capturing customer input and designing customized customer management plans.

Organizations seeking to achieve a profitable return on million-dollar CRM investments are turning to refined customer segmentation and differentiated service levels to achieve their goals, the consultancy reported in the study "Improving Customer Satisfaction and Retention Through Differentiated Service Levels."

Best Practices studied how companies understand customer needs, design services to address those needs and develop long-term customer retention strategies.

Among the companies studied for the report, the consultancy found one that had developed a customer service call center capable of handling 90 percent of its 300,000 daily calls within 20 seconds. Another company tied up to 60 percent of senior management compensation to customer satisfaction, and one benchmarked firm segmented customers by share-of-wallet and profit potential by directing its most profitable customers to "premium" call centers staffed with highly trained, designated account managers.

"The marketplace is a jungle," said Chris Bogan, president and CEO of Best Practices. "As companies begin to leverage CRM for profitability, they are realizing that an effective differentiated service level model is a piece of the puzzle that is critical for survival."